The chief executive of advisory firm
Greenhill & Co
,
Scott Bok
, says global markets will remain volatile as long as uncertainty about the US Federal Reserve’s fiscal stimulus persists. But he is optimistic that plans for withdrawal of the program are a sign the US economy has improved and companies will soon regain the confidence to undertake mergers and acquisitions.

“No one has seen this movie before; we don’t know how it ends," Mr Bok told The Australian Financial Review during a three-day visit to Sydney last week to catch up with staff and clients.

“Now we’re down this road, it’s going to be very challenging to unwind the stimulus. But I think it’s going to take a long time; it’s going to be in extreme slow motion."

Mr Bok said once volatility subsided, lower share prices were likely to lead to more deals. Merger and acquisition (M&A) activity in the US had largely ground to a halt, he said, because boards were unwilling to pay large takeover premiums on top of shares prices inflated by the Fed’s quantitative easing policy. Australia was also feeling the effects, but with the added burden of political uncertainty.

“As an outsider, it seems to me some of the political uncertainty here has been a reason for people to put off ­pursuing opportunities," he says.

Global M&A activity is tracking at $US1.2 trillion ($A1.3 trillion) so far this calendar year, after slumping in 2012 to $US2.71 trillion, which was 41 per cent off the 2007 peak, according to
­Dealogic
. In the US, the $US979.8 billion in M&A last year was 37 per cent off the 2007 peak. Europe is on track for the slowest year for M&A since 1997.

In Australia, $34 billion of deals have been announced so far this year, ­Dealogic data shows.

Greenhill entered the Australian market in 2010 with the $200 million acquisition of
Caliburn Partnership
, the highly successful boutique adviser founded in 2001 by
Simon Mordant
,
Ron Malek
and
Peter Hunt
.The local team remained in place and became known as
Greenhill Caliburn
, dropping the latter part of the name in September last year. In January Mr Mordant and Mr Malek were promoted to global vice chairmen and bankers
Roger Feletto
and
Jamie Garis
were made co-heads of the Australian business.

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Since the acquisition, the Australian arm has made up 15-to-20 per cent of global revenue. Sydney is the third- largest office globally behind New York and London.

“It’s been a wonderful thing," Mr Bok says of the Caliburn acquisition. “For the old Caliburn business to remain Australian focused in a globalised ­market, clearly they would have missed out on a lot of deals. For Greenhill, we want to be in all the major developed markets, and Australia was very ­important. Right now we’re working on a dozen situations around the world in conjunction with the team here."

Greenhill went on an expansion spree in the years after the financial ­crisis. It opened offices in Chicago, San Francisco, Los Angeles and Stockholm and poached dozens of partners from top-tier investment banks. The firm now has 325 staff globally, including 70 managing directors. But Mr Bok added Greenhill was selective in its hiring and had passed over the resumés of many bankers who had worked at more than three firms.

“The financial crisis wasn’t a pleasant experience for anybody, but there were two main benefits for us," Mr Bok says. “It drove a lot of talent out of the big banks and made a lot of clients realise the big banks are primarily concerned with principal activities."

Unsurprisingly, Mr Bok is highly critical of the principal trading activities and conflicts of interest at major banks.

“The main objective [of the big banks] is to invest and manage their ­trillion-dollar balance sheet in a way that gets the best return," he says. “Their objective in dealing with clients, frankly, is to sell that client as many different products as they possibly can.

“Greenhill was born of the desire to be in a firm where the entire business was about advising clients. What makes us truly unique is that we are pure advisory. We are not trying to do capital markets, we do not underwrite securities, we are not making loans, we are not investing our own capital.

“Clients don’t have to worry about a conflict of cross-selling products."

He says in many ways Greenhill today resembled the investment banks of the 1970s and 1980s.

Greenhill’s founder and chairman
Robert Greenhill
spent 30 years at
­Morgan Stanley
where he was president, vice chairman, head of investment banking and founded the bank’s M&A group. When Greenhill floated on the New York Stock Exchange in 2004, Mr Greenhill was fond of telling potential investors the firm had the same number of employees as Morgan Stanley when he joined in the early 1960s, but more capital.

Mr Bok joined Greenhill from Morgan Stanley as a managing director in its New York office in 1997, shortly after it was founded. He previously spent 10 years working alongside Mr Greenhill in the mergers, acquisitions and restructuring department.

Greenhill claims to have the highest productivity per employee of all investment banks, as measured by revenue per employee. Last year the firm average revenue of $1 million per employee, down from almost $2 million per employee during the “glory years".

Mr Bok, who describes himself as an optimist by nature, is upbeat about the US but does not expect those glory years to return any time soon.

“We have a lot of major problems in terms of our deficit and structure of our health care industry," he says. “The ­positives are we have a growing popu­lation, a lot of natural resources and the shale revolution, which has caused an extraordinary upturn in US oil production and reduced our reliance on the Middle East for oil and gas. But probably the most positive thing about the US is its entrepreneurial spirit."